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H-P CEO Mark Hurd Resigns

H-P/Hurd story updated with comments from H-P's board and interim CEO Cathie Lesjak.

PALO ALTO, Calif. (
TheStreet) --
Hewlett-Packard(HPQ - Get Report) CEO Mark Hurd has resigned in a shock move, following an investigation into an accusation of sexual harassment.

In a statement, H-P explained that Hurd's decision was made following an investigation by outside legal counsel and the General Counsel's Office, overseen by the Board. This was related to a claim of sexual harassment against Hurd and H-P by a former contractor to H-P, it said.

"The investigation determined there was no violation of H-P's sexual harassment policy, but did find violations of H-P's standards of business conduct," explained H-P.

H-P CEO, Mark Hurd

"Mark had a close personal relationship with an H-P contractor that was hired by the office of the CEO," said Mike Holston, H-P's General Counsel, on a last-minute investor call Friday afternoon. "Mark's conduct displayed a profound lack of judgement ... based on all [we turned up], the board concluded -- and Mark agreed -- that it would be impossible for him to be an effective leader anymore."

Holston explained that H-P had unearthed irregularities in payments made to the contractor, as well as Hurd's expense reports. "It was a systematic pattern of improper expenses and inaccurate reports," he said.

Hurd, who took the helm at H-P following the departure of his controversial predecessor, Carly Fiorina, is credited with turning the tech giant's fortunes around.

Cathie Lesjak, H-P's CFO, will now serve as the company's interim CEO, but ruled herself out of consideration for the permanent CEO's role. "Fundamentally, our strategy isn't changing at H-P," Lesjak said during the call. "I can assure you that as interim CEO, my sole focus will be keeping this great company focused on our its executive strategy."

Cathie Lesjak, H-P's interim CEO.

Hurd issued the following statement on his decision to resign:

"As the investigation progressed, I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at H-P and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership. This is a painful decision for me to make after five years at H-P, but I believe it would be difficult for me to continue as an effective leader at H-P and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of H-P."